Dr Ernest Addison, BoG Governor
The Bank of Ghana (BoG) has indicated that the prices of the country’s main cash crop, cocoa, are expected to remain dampened due to favourable weather patterns in West Africa and depressed global demand.
The Central Bank, which disclosed this in its Monetary Policy Summary report for September 2017, also said the outlook for gold prices remained favourable, supported by policy uncertainties that might boost the metal’s safe haven appeal.
In its July 2017 summary report, the bank hinted that cocoa prices are likely to remain subdued as a result of excess supply amid stagnated demand in the US and Europe and added that average cocoa prices were projected to trade at US$1,986 per tonne by the end of the third quarter of 2017.
According to the bank, however, such developments, coupled with the expected increase in export volumes, should in the short-to-medium term sustain improvements in Ghana’s trade balance.
It also noted: “Economic activity is expected to strengthen in 2017 on the back of gradual rebound in credit extension to the private sector and improvement in the macro fundamentals. In addition, the favourable ruling on the boundary dispute between Ghana and Ivory Coast is expected to boost oil productive activities and provide additional impetus for Ghana’s medium-term growth prospects.”
Commenting on merchandise trade, the bank said for the first eight months of 2017, provisional estimates of the trade account indicated a surplus of US$1.2 billion (2.5 percent of GDP), compared to a deficit of US$1.8 billion (4.3 percent of GDP) over the same period in 2016.
“The improvement in the trade account was driven by higher export earnings and lower imports over the period. For the period January to August 2017, export earnings totaled US$8.9 billion, representing an increase of 27.6 percent from US$7.0 billion recorded for the same period in 2016. The increase in export receipts was attributed to higher earnings from gold, crude oil, and cocoa beans and products.
“The provisional estimates of value of merchandise imports for the first eight months of 2017 amounted to US$7.8 billion, indicating a 12.3 percent decline from the level recorded in the same period of 2016. The decrease reflected in both the non-oil and oil categories.”
In the outlook, it said increased production volumes of the three export commodities and continued recovery in prices were likely to impact positively on the trade account, adding that the strong trade surplus should also translate into favourable current account outturn.